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Monday, 29 June 2015

Like it or not, we have entered the age of Uber --
the love-it-or-loathe-it ride-share scheme which has caught not only the
imagination of the public but the attention of the lawyers. In this guest
post, Katfriend Revital
Cohen (Baker & McKenzie, Barcelona) tells us all about a
legal development that may have major repercussions in Europe not just for our
understanding of the concept of a "transport service" but for our
attitude towards new web-based business models that do not fit neatly within
the concepts and classifications found in European Union regulatory and
competition law up to the earlier years of this century, Revital
explains:

Is UberPOP a transport service? A new reference to the
CJEU

Many readers will be familiar with Uber, the on-demand
ride-sharing platform which has revolutionised the concept of urban transport.
Launched in San Francisco in 2009, it has quickly expanded all over the world
and it is now currently available in 57
countries.

Uber offers a range of different services. From UberBLACK, a
professional limousine service, to UberPOP,an informal
ride-sharing service connecting passengers with drivers of private cars through
a smartphone application. The GPS location sharing, the pick-up timing and the
payment are all performed online. UberPOP drivers are not required to have a
licence to pick up the passengers and are not bound to regulations that apply
to taxis.

UberPOP's undeniable success has nevertheless shaken the
heavily regulated taxi industry. In Europe, following taxi associations’
protests and claims, UberPOP has been restricted in Germany, Belgium, the
Netherlands, France and Italy. In some of those countries, courts have taken
the view that Uber operates as a conventional transport company and that it is
breaching licensing regulations governing professional taxi drivers, as well as
local laws on passenger transportation since the activities of UberPOP drivers
do not fall within the scope of the relevant licences.

Asociación Profesional Élite Taxi on Twitter

In Spain, UberPOP has been temporarily suspendedsince
December following an injunctionissued
by the Commercial Court of Madrid. This is not the only court dealing with Uber
in Spain since, on 29 October 2014, Profesional Élite Taxi filed a claim before
the Commercial Court of Barcelona alleging that Uber’s activities constituted
acts of unfair competition. Six months after the injunction issued by the
Madrid Court, Judge José
María Fernández Seijo, who is handling the Uber case in Barcelona,
decided to stay the proceedings and seek guidance from the Court of Justice of
the European Union (CJEU) as regards the legal nature of the services offered
by Uber.

The Order for Reference, which was issued on 17 June, is
available herein Spanish.
Paragraph 9 of the Order can be translated as follows:

"In order to determine whether Uber is engaging in acts
of unfair competition under Spanish law, I consider it necessary to determine
before whether or not [Uber] requires a prior authorization; the authorization
will depend on the nature of services which are carried out [by Uber], by
establishing whether it is a transport service, an information society service,
or a combination of both things."

In greater detail, the questions which are referred to the
CJEU are:

1. Does Article 2(2)(d) of Directive
2006/123 ... on services in the internal market [the
“Services Directive”]exclude from the scope of the Directive the
lucrative activities of intermediation between the owner of a vehicle and a
person needing transportation within a given city, [where that
intermediation consists in]providing the digital means – interface
and software application – allowing them to connect, as that service is deemed
a transport service? [Article 2.2 of the Services Directive expressly
excludes a number of services from its scope, including "(d) services in
the field of transport, including port services, falling within the scope of
Title V of the Treaty". Recital (21) of the Services Directive also
establishes that transport services, including taxis, should be excluded from
the scope of the Services Directive].

2. Should the service carried out by UBER SYSTEMS
SPAIN, S.L. not be considered a transport service but fall within the scope of
the Services Directive, is Article 15 of the Unfair Competition Act –
which refers to the infringement of any laws having as their object the
regulation of trade – contrary to the Services Directive, namely Article 9 on
the freedom of establishment and authorization scheme, when the reference to
internal laws or rules is made without taking into account that the
authorization, permit, and license regime cannot be in any way restrictive,
that is, cannot unreasonably hinder the principle of the freedom of
establishment? [In accordance with Article 9(1) of the Services
Directive, authorisation schemes may be maintained by Member States only if
they are non-discriminatory, justified by an overriding reason relating to the
public interest and proportionate, that is, that the objective pursued cannot
be attained by means of a less restrictive measure].

Those questions might still be not final as the parties had
five days in which to submit comments. The final questions, though, have not
been reported yet.

Licensed to purr ...

The CJEU answers could have a huge potential impact on the
legal challenges that Uber is currently facing in Europe. Indeed, should the
CJEU rule that Uber is not a transport service and that the Services Directive
applies, the legality of the restrictions imposed by the Member States under
the current regulations will have to be assessed under the principles enshrined
in the Services Directive, namely the principle of non-discrimination, the
principle of proportionality and freedom of establishment, to the pleasure of Courtney
Love.

Be that as it may, the Court of Barcelona’s reference may
shed light on the wider, international debate over the sharing economy versus
traditional services. On one hand, new services such as Uber have completely
changed perception of transportation, accommodation, advertising, food services
and so on. As this case
study published
by the Business
Innovation Observatory highlights, the growth of the internet and
of the information technology has created value and opportunity without
resorting to traditional industry, by facilitating

“a match
between a consumer owning a certain resource (property or skill/competence) and
a consumer in need of that resource, at the right time and against reasonable
transaction costs”.

While they
present substantial differences compared to traditional industry, in some cases
they share the same “traditional” public or, anyhow influence, the way
consumers enjoy “traditional” services (think, eg, to over-the-top video
platforms providing user generated contents compared to traditional
broadcasters that choose their programmes).

Sharing can be fun ...

Is that enough to
justify the application of laws and regulations designed for conventional
industry to new platforms? The answer to this question is far from easy,
given the different (and sometimes diverging) interests involved. On the one
hand, traditional industries should be put in the position to play in a
balanced and non-discriminatory competitive environment. On the other,
new-economy enterprises deserve a legal framework that values their
peculiarities, allowing them to exist and keep innovating. Last but not least,
consumers' right to choose and to benefit of new economy's added value shall
be safeguarded.

Inasmuch as new and traditional services actually compete one with the other, a
reasonable balance could be found by providing light regulation for the first
and a substantial de-regulation for the latter. Ultimately a less-is-more legal
framework for all could be another added value brought by new economy.

Says the IPKat, apart from its obvious challenge placed by
Uber to traditional transport service licensing and regulation, the use of the
word "Uber" within the context of an intermediation between consumers
(passengers) and the service providers (drivers) raises questions for
intermediation activities that address trade mark law too. These affect the
correct classification of services as well as trade mark use: whose use is it
and what is its effect, whether for the purposes of acquiring distinctive
character, of establishing genuine use, or of infringement?

3 comments:

Les Hurdle
said...

Should Uber drivers pay for the Neighbouring Right if they ‘play’ music while acting in a retail fashion?Who would collect the data & money from 57 countries and countless drivers, how would performers be paid?

Of course they should. The drivers should be appropriately licensed as individual businesses. Uber should not, since Uber only acts as an introductions agency, metering service provider and payment processor. Uber does not perform any restricted act. As to who collects the data, the situation would be similar to that of any other business or trader: self-reporting, regulated by "mystery shopper" activities.

I don't quite see the IP angle in the Uber referral, this is more about competition and labour law.

In any case, I expect rogue's bubble to burst in one way or another, even though I don't expect the cabbies' lot to improve in the process.

The next installment is potentially more interesting: what about vehicles without human drivers? It is only a matter of time before the various self-driving car projects mature, including Google's. I don't expect a business model where tin fetishes are sold to private buyers, who would leave them parked 23 hours a day in one place or another, to be viable.

One hundred years of automotive blight are enough.

The obvious use would be automated on-demand transportation services, for both passengers and goods, and for short and long distances.

I believe this would at last signal the end of the private motorcar.

This would be the ultimate writing on the wall for the majority of taxi and lorry drivers, with relatively few jobs left in sectors such as hearse driving. This isn't as desirable.

The first outcome I rather hope for, even though it compounds the present issues about privacy, as I don't think you will be able to hail a Google car on the street and pay in cash in a vehicle totally devoid of surveillance devices. But then a human driver and his dispatcher can also see and remember things.

The second one is rather more difficult. This would spell upheaval in traditional cab services, or even Uber if it manage to survive another ten years or so.

The first launcher of such a service would be very vertically integrated, providing the vehicle, its sensors and hazard avoidance software, and the controlling the booking and street navigation system. Would they attempt to break into each market by creating a new service from the ground up, with garages, workshops, and vehicles? This begins to look like a monopoly, especially if the business is backed up by a strong IP portfolio.

An alternative would be to sell automated vehicles to existing taxicab operators. Can this be viable? On what basis would the operators compete?

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